>> you are no macgyver. >> the stocks down 156 points and jonathan pointed out what happened with the ten-year and the treasury is now yielding below 1.7% and 1.697%. thank you very much for being with us today. have a great weekend, everybody. it's time for "squawk on the street." it is shaping up to be an ugly session on wall street after that jobless number came in below consensus. the lowest number of jobs since june and the biggest miss in two years. i'm carl quintanilla with jim cramer and david faber live at the nyse. the report came out with virtually nothing positive to say. europe, as well, selling off as we had a crazy session in asia overnight, too. the nikkei with its own story and we'll get to that in a moment and we will start with jobs in the states. the economy just adding 88,000 jobs in march and below

consensus of 200,000. the unemployment rate did tick .1% lower to 7.6, guys, the result of a labor participation rate. the lowest since '79. what do you think? >> look, this is just bad, okay? i'm a silver lining playbook kind of guy, i don't have one. >> yes, you are. >> i'm trying to put myself where we were in our heads three, four weeks ago thinking, we heard about sequester. we heard that this was going to be a paralysis and the people were going to get laid off. that put the fear into a lot of employers. i do think that this is on washington, now you can say some of it's europe and some of it's china, and that's why i blame this number? >> do you think this is a sequester effect? sequester, payroll tax and increase of the rich. they want to increase the tax on the rich even more by changing the deduction level.

they're very out of step with the country. they think that what with they did did to hurt and we would layoff people left and right. look at dell. look at f-5. is it something that sustains itself, though? can we expect that the impact of sequester is not something that we'll have seen for next month? but will it be something that we'll see -- payroll tax felt as though we skirted by that, but is it coming back to hurt us? retail was a big -- >> down 24,000. >> is that obama care? is that people not wanting to have these people on? we seem to have these overtime numbers continue to be strong meaning you'd rather to pay existing people more than hire more people. housing's been good, but not enough. i think if you see this number we know that autos have been good, not enough. i'm not speechless about the number, but it's just -- i can understand why people would --

>> construction was down. energy, jim, was down. the first time that energy did not add jobs in this country. >> we had a good baker hughes number, but natural gas went to a level where it was too cheap to drill and natural gas has since come up. >> it was not a great number and we have pointed many times to the resurgence and the manufacturing jobs to the extent that we were relying on cheap energy because of the natural gas play. >> it's not coming together, and i think one thing that i haven't heard talked about in the earlier show is bernanke, we spent a huge amount of time talking about when is he going to stop that bond buying because things were so robust and the lead story in the journal today and "the new york times," employment is getting so good. could the stories be more wrong? could they be more wrong? >> you said it's time to stop the discussion about when they taper. >> they need it. thank you. >> so the discussion prior to

the number today was about how the u.s. was the best house in a bad neighborhood again, lifers in japan, and soros, we'll talk about him in a second. >> right. >> might start to go abroad in a big way and where else are you going go? >> you were answering the question on twitter, the euro, the yen? >> gin futures. >> does that change? >> when our stocks today come down to level where thes dividend, they give you a good yield versus bonds, we'll find a floor. is that all going to happen today? >> it's a bad day. >> there are a lot of numbers that i don't think are significant. >> i just finished this study over the last six years about what number is the only number you need to know and it is this number, and it is real bad. >> except that i feel that so many days we've come in with an employment number and the early reaction versus where we close

to be a different thing. >> now we have qe forever. and by the way, i don't know if that's a friday reaction. the ten-year is really going to tell. the ten-year treasury just soaring, but go back to your point. there is no place to go, but that does not mean we don't sell first before we get here. if you're wealthy or if you have a pension plan you have to get out of europe. >> it is still the best neighborhood. >> it is. >> we are back to 1.6-something on the ten nf year. >> where are you going go to get any kind of a yield? >> maybe buy some settees. >> and the pesos -- it is one of the best countries in the world right now, believe it or not. >> there is the notion of seasonality. last march the estimate was

2.05, we got 120. we all know the number is manufactured to some degree, the number is artificial and maybe this is what happens in the spring. look, if you were to talk to the ceo of a major 50% of the shirts and ties in this market pbh, he said the weather was really bad in march. the weather was terrible and that will have an impact. i can explain away some. i do think that if you go back and watch tv, if we were to play tapes of what the president was saying right before the sequester, i think we were more scared and we forgot how scary it was when you see the justice department, and when you see the attorney general of the united states come on and say listen, we're not going take down the bad guys and we have the transport secretary come out and long lines and delta said the other day. >> the sequester may have been irrationally imposed but even if would have been rationally imposed it still would have resulted in jobs being lost.

that's where we're headed if you're trying to cut spending. >> right. i think austerity is not the right time and 30 years yielding 2.867. the 30 year? >> you go out and get yourself a mortgage again. >> it was only a month or two ago, hey, we're off to the races and we'll be over two. get done now. lock it in now, borrow now and by the way, what are the impact going to be when they stock qe? that conversation, see you later. >> they can ring up a gigantic profit and start over again. >> they could. talk about buying bonds, by the way. the nikkei surged to 4.5 your highs and briefly trading above the 13,000 mark for the first time in five years as investors cheered the bank of japan's monetary onslaught of $1.4 trillion. george soros speaking to cnbc speaking about japan and the yen. take a listen. >> japan is doing is actually quite dangerous?

>> really? >> yes because they're doing it after 25 years of just simply accumulating deficits and not getting the economy going. if the yen starts to fall, which it has done then the fall may become like an avalanche. >> so interesting. we talked a great deal about it yesterday as we should have. it had a big impact on our market and certainly over japan. you have central banks all over the world flooding. >> draghi didn't do anything yesterday, but we know where we are there. here, what's the balance sheet? >> 3 trillion. >> the japanese are just going crazy. >> the picture of koroda on the cover, he's doing everything, but scattering money from the back of a toyota. you'll want to get to know this man. >> the first is cyprus and

they'll confiscate -- unbelievable plan, they'll confiscate the poor people's -- and then they're saying that's the beginning of the end of banking and five days later we're trying to figure out where cyprus is and we're buying cypress semiconductor. you know what? japan is not that big versus the united states economy, but we still -- >> it's still pretty big. >> but i'm saying that if you look at the stock market it has done well during this period. >> it has, but you get that yen coming down, down, down, down, you spark a little bit of a trade war. >> trade war's bad. >> yesterday they were saying some things about, come on, the ceo of gm. you have soros and my friend carl bash yesterday on the show saying this is an experiment that is not going to -- >> it's a stupid experiment. it's a bad experiment and deflation around the world and everyone remembers that we had tremendous deflation in germany before we had -- before they had

incredible inflation. before the pensions were wiped out by inflation and if you bought property they did well for inflation so they wouldn't have a boom, bust. >> hard to overstate. >> at one point -- >> it closed up 1.6. >> and that was scary. >> this plan is working and then i said this plan is failing! everything is condensed into a very particular -- >> things happened fast. >> where are you now on the plan? >> the plan is failing miserably now. i'm sorry i laughed. i want to be more funereal.

>> you've got to laugh. >> and smile. >> it's getting harder to do. >> i do think that we come back and we say ben bernanke, thank you. he was talking about -- remember the last time he talked at the press conference and hey, bozo, when will you start worrying about the u.s. economy. i don't know. maybe it wasn't that strong. can i praise ben bernanke --? can we get ben bernanke the signed book. you know the signed thing that we did. did you sign that or was that a rebellion thing? >> no, i did it. i did it. let me come back to the u.s. market, earnings and how focused we should be on earnings season. we have had a market hitting highs and multiples have been expanding in part because there is a hope that we will see significant growth even if it's not the top line. what, if anything, does this jobs number say about what we

can expect? >> if the government is a client, look out. that's when we saw with the five. a dell. >> david, call your guys and tell them to stop the dell deal. honestly, are they looking at this number saying this is a bridge too far? do they do that kind of thing? >> they do. michael dell and silverlake are locked in at 13.65. >> what does it do to the market? is that ual, 1989? >> no. >> precipitous decline. >> unaffected stock price? i don't know what that would be again. >> lower. i would go lower. >> f-5 said government's bad. >> we'll talk some more networking in a minute. some of the stories we're also watching ahead of the opening bell today. samsung saying first-quarter profits up 15% driven largely by smartphone sales. cnet is saying apple is closer to a deal, and expected to give pandora a run for its money.

>> kfc stoet go boneless, if will have fried chicken legs and no bones. this is a big deal. >> i'm a popeye's guy, so i don't know. i'm a popeye's guy. i'm a craw fish guy, too. >> the chicken and the corn that can't even stand up. their legs are too small? evolution hasn't caught up and they're literally stuck there. >> mr. discovery chanel. >> so delicious. >> i now know what apple should do with its cache? buy samsung. >> that's a good one. >> it might be hard for them to do. 25% of the south korean economy. >> they can buy stock in samsung and participate in the destruction of their own business. >> i would love to see that hostel. i'd break that story. >> they would have the ally with the north korean guy. >> that's true.

that's true. >> they could go to samsung and you know who would have to broker that? >> apple and kim jong-un. dennis rodman is the only guy that can stop that. >> that's true. >> that's something. when we come back, a tech stock down 20% in the pre-market. we'll find out what it means for tech as a whole. also ahead the chairman of the white house council of economic advisers alan krueger will join us and see what the white house has to say about the numbers today. one more look at futures. we've not had a decline on the dow since february 25th. back then we were down 216. implied open down 139. back in a minute.

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f5 networks down sharply after slashing its outlook with the north american business. the it is also getting hit with downgrades and four different firms. star nation is cutting its price target. it's dividing the future for f-5. >> stern doesn't like it. >> oh, okay. >> yeah, they downgraded it. >> i do not follow the research

on f-5. what is the larger takeaway? >> the conference call was a horrendous conference call where they basically said this was bad. that was bad. this was bad. u.s. telco spent, underneath this, i believe that they may have the wrong mousetrap. i think if you go virtualization, you don't need them. i don't think people will distinguish that today. there's 50 telco and different companies, but maybe f-5's architecture which a lot of people don't -- >> i was thinking shakespeare. >> i was going there. >> yes. a-2 brutus, but i do know that facebook did cut back dramatically ordering for f-5, and i think that may be the trick. f-5 was on ramp to the internet and you may not need them. >> needham today said it was an r not an f-5 problem.

it got a setback, right? >> oh definitely, carl. this was one of those things where we were talking about samsung versus apple and then we realize there's this giant infrastructure. it was not enterprise. it was not private sector, but the government is a huge buyer of technology. >> the government is pulling back everywhere. the government is just -- i guess, except for medicare because boy, the government is not spending anywhere. >> according to dh ing ting to changed cpi in an effort to change 1.7. >> don't you love austerity and immigration. the americans can't find jobs. >> we need an immigration bill, you know that, come on. we need a uniform and a real approach to it. that needs to happen. that will only help the u.s. economy. i disagree. >> i just think that if you're unemploy unemployed, i'm not a xenophobe.

>> i know you're not. that's why i'm surprised to see that. >> that's a fast track and not figuring how to create job, but more people who can have jobs. >> the earnings out of the jobs number 1.8 year over year and the cpi is running, too. even if you are employed in a power sector. >> unless -- that's with low inflation, jim. >> no, look, it's a bad moment. it's a bad moment, and all they do is fight in washington, and no, i don't want more stimulus, but i do feel that there is -- that this is not necessarily the greatest belt-tightening moment. how about that? >> is there ever a good one? >> 1994-95. >> it doesn't mean we should go after entitlements. making the right choices. >> i would like to see the

medicare a and b merge. i think the pricing is so hard to understand. it's not great. i would like to see social security change for people in 2040 right now. put that you through, but i'm a tv show host. >> yes. >> a good one. a really good one. >> really? you just made my -- >> a lot of twitter followers. it is jobs friday, of course, and it looks like it could be a rough trading day. don't worry, though, cramer has you ready. one look at his mad dash. we want to close the dow positive for the week, you need 14.578 and you never know. that might be a struggle. opening bell after the break. ♪

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four minutes before the opening bell. time for cramer's "mad dash" ahead of that market open. celgene. >> you had a scenario where people digested things and didn't see something they liked. watch celgene and that's by deutsche bank and this will turn before the rest of the market. >> so this could be a tell, if, in fact, people start to calm down because they have a psoriasis drug that would be selling regardless of the employment number and the heartbreak of psoriasis is a real problem and they've got a real solution. >> hewlett-packard not going to move a lot on this. >> no, you follow hewlett-packard closely. is this an instance where a change in the board could mean

something positive. jim stewart chronicled that this was a terrible board. >> you have two members stepping up as chairman interim. they're looking for a permanent chairman, so to speak, but meg whitman is running the company. she has the support of the board at this point. ray lane is staying on that board of directors. pat russo are two of the strongest voices in the boardroom. >> okay. but a dysfunctional board does impair a company. it does, i don't believe that i would classify this board any longer as dysfunctional. >> i would tell you this stock will be part of tech. i don't like what's been happening with their markets. >> and they were terrible predictions about pc sales. >> pc sales are abysmal. >> it was down 44% last year and we're stocking the dow. i want to sell this stock? >> you do. >> yes, the nasdaq, critical levels and the nasdaq is a sale.

>> all right. we're going to see, everything will be on sale at the open. the white house' first reaction to today's jobs number. alan krueger will join us live in a few minutes and that opening bell is live. we're back after this.

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s&p has been up, doup, down, alternating for sessions. if we open down today that is the longest streak ever on the sip. is that crazy? >> the likelihood that we will will close down is greater given the jobs number. >> we have a first-day reaction in which cyprus is bad. and the united states, best of both worlds and that has been the yin and yang. remember, we came into april with the data that said they're up this much in the first quarter. you've never been down.

is that going to be the test today? >> the dow has not been negative since 2005 which some say maybe we're due and the season argument is caught up with this later in the year in may. >> the retailers are not telling. they're just not. >> the opening bell this morning down here at the stock exchange. celebrating 116 years of helping to educate and find employment for women in need. >> wow! >> and at the nasdaq, pvc energy an independent oil and natural gas company. a couple of stories from yesterday that still bear watching today. best buy and facebook. interested in either one? >> those addicted to facebook have to love this. my charitable trust owns facebook. zuckerberg said, listen, this is an android world. this is not an apple world and people are just saying, wow! he's saying right for samsung, right for android. apple not cutting a break from

that meeting yesterday. just not. best buy, meantime. samsung. samsung. >> that was up 16%. >> it was like the japanese -- >> it's got an 8 important 5 million market again. it's more than a double in three months. >> is that one of those -- >> you have to believe that some of those were down a little bit and it's down 1% right now, best buy, but what a move. you have a lot of analysts just raised their price target. they just stopped going down and things stopped faltering and that didn't matter. this store within a store. >> you get samsung to sell products and you are going to sell more of them? >> higher margin? >> no, look. when people say they don't like a stock they short it now. they don't say i'm not going to buy it. i'll short that. i'll short best buy and it ain't working. it's a bad short. >> think that's fairly obvious

at this point. it was a bad short. would it still be a bad short at 25? >> no, but that's going to require other people to start selling and it seems like the people that are still in it are in it to win. they're not fleeing it like they should. the people who stayed in this stock are done selling, and i think that's part of the reason why it's been pretty good. remember macy's was at a high yesterday. vf corp had a high yesterday. do you sell all those because of the employment number? macy's only down 58 cents and jc penney, by the way, it was a good day for jc penney and they got the home goods launch. >> yes. >> so i'll see you there. you're going to raise me? anything. >> are you not shopping this weekend? no. >> are you really? you're going all of the way down there? >> i'm giving the keynote to the business editors and writers?

oh, very nice. >> that tyson's corner has a lot of shopping. >> that's where they have the jc penney wi-fi. >> there are not many stocks in the green on the s&p. >> i don't have any. >> devry, is this a day where you short the manpower and adps? they've been so hot. i'm not sure when it will go after manpower united states because that's the temporary employment way around the health care act. adp may be -- adp is a well-run company, and paychex was saying they need yield, so i don't know. let them come in and then take a look at the yields will tell the tale. >> last night your point on "mad money," we need to, in

shakespearean terms, need to get rid of the xhifs. >> it doesn't need to be rest t restart restarted. talk about the issue that we're not talking about today is how is the fed going to get out of this bond-buying binge. the answer is they could sell every bond they want. >> i guess they being, but they're still in for 85 billion a month, right? >> they could sell them. it's the wrong concern. it was the wrong concern. i'm saying that bernanke got it right. the world got it wrong, and we should lay off bernanke for a couple of days. >> there was a big column in usa today that there was no comment in bonds. when was the last time a neighbor talked and bragged about how much they're making in bonds? the sentiment is not great out there. >> i just can't believe that we came into another year where they say this is going to be the year. short the ten-year and this time it will work and it looked like it was and now we have

questions. by the way, i know, we're only four months into the year. >> remember, it's never been down, but all of that stuff gets thrown out the window on a day like today, but i do think that if the focus was, indeed that we were worried about bernanke being off course because the economy was creating a lot of jobs, the economists where i felt almost to a person and the economists were wrong. >> we'll talk to the white house chief economist in a moment here, but first --? he'll probably find a silver lining. >> the dow is down 153 at the open and bob pisani is on the floor. good morning, bob. >> this is the end of qe talk and this is exactly what a lot of the guys on the fed were talking about earlier. they were worried that the economy would pick up some steam and then it would just sort of droop and hit some kind of patch, hopefully just a soft patch and that's what a lot of people were talking about. we have the ism services, adp and initial claims and now the

non-farm payroll number's weaker than expected. the question is is this just a breather? that's what everyone is talking about here and is this some protracted downturn that's going to occur here and a lot of people and my sense is, too, that this is a breather and look at what we've had in housing and look what we've had in autos and capital spending that we've seen that's been occurring. if you look at this march data that we talked about this week and the litany of crumby economic data, you think, my heavens we'll do 1.5% gdp for 2013, the whole year and we should be careful on extracting during the whole year and it's looking more likely that this is 2% or 3% gdp for 2013 is the total and not 3% and above, and not 1.5% for the whole year and that's not what people should hold on to right now. the important thing is whether or not the market is vulnerable right now and we're near new highs and that's the way i look at it and the last time we were at 1.7% on the ten-year right

now. the last time we were at 1.7% on the -- on the ten-year, the s&p 500 was 10% below where it was right now. that was the very end of december. that's a good idea of the parameters of risk that we're facing right now. meantime, earnings are starting next week and they start on friday, by the way. i know alcoa's monday. alcoa has never been a bellwether and for me, earnings start on friday with wells fargo and j.p. morgan and the good news is there's that down, and we're only up about 1.5% for the quarter and we're almost 4% at the start of the quarter and i know that's not a lot of consolation on a day by today and it is some hope that will moderate some of the declines that we're seeing. materials and financials and industrials are the weakest sectors. >> back to you. >> thank you very much for that. we want to get reaction from the white house. alan krueger, the chairman of the white house counsel of economic advisers.

good to have you. good morning. >> good morning. >> i don't need to tell you how ugly this look to the market. is there anything regarding weather or the sequester or payroll taxes that will make it look anything less painful than it feels? >> i think you're looking at today's report and other indicators that are coming in. the economy is beginning to heal. what we need to do in washington is avoid self-inflicted wounds and most importantly the sequester, the congressional budget office estimates that we'll reduce 750,000 equivalent jobs by the end of the year. so we've done a lot of healing in the economy. the housing sector is finally making a turn, and we shouldn't be putting up headwinds in the way of the recovery that's taking place. >> dr. krueger, jim cramer here. is this a good time to limit the deducks of rich people? is this a good time to be

talking about belt tightening or you know what? this number is so bad that we've got to approve keystone. this number is so bad that we have to expand the budget to be able to create jobs. isn't it like that? >> i think this report, and frankly, where we've been over the last year supports the president's proposal to have a balanced approach which supports growth in the near-term, invest in our infrastructure and invest in manufacturing innovation and invest in preschool so we're more competitive in the future and addresses the long-run deficit problems and the president has shown this it's possible to do that. >> dr. krueger, there's a lot of focus on the labor force participation rate. i would love to get your take on this, and when you add in the people that entered the workforce, we had a decline of half a million people and what is behind that and to the critics who say the obama administration is manipulating this number to look better.

what do you say? >> first of all, it's absurd to say that the obama administration fiddles with the data. the bureau of labor statistics is a very professional organization. their integrity is beyond criticism. the numbers are put together by professional staff so that kind of silliness should just be off the air. >> what about the subject of the continued decline in labor force? >> the labor force participation peaked back in 2000. the bush administration, and the counsel of economic advisors and the bush administration that we'd see participation declining. we're getting older as a nation and that's an issue that we face. that said, we should really keep focused on the big issue here which is speeding up job growth. we've had 37 months in a row of private sector job growth and 6.5 jobs, but we want to speed that up, given how many people lost their jobs in the economic crisis it's important that we keep our eye on the ball which

is doing everything we can to support job growth in the economy and to do what the president said, his north star, to make america a magnet for job creation and to ove worker skills and to make sure our jobs pay decent wagees. >> dr. krueger, how significant was the sequester in this number this month? ahead of the numbers some economists had estimates of 10,000, is it for this particular month or still to come? >> a lot of businesses have told us that the sequester is weighing on their hiring. the congressional budget office and other independent analysts have concluded that it could cost us three-quarters of a million jobs by the end of the year. they is quester is something i don't mead and it doesn't solve the deficit problem and it cuts key investments in the future and it's a self-inflicted move that the president has been pressing congress to remove. >> doctor krueger, is there anything that happens today and

the president comes out, we have to do something. this is a really bad number. is there anything that just changes today? >> i think that today's report doesn't change the economic strategy we should be pursuing. we've known all along we face a big challenge in terms of job creation and so many jobs were lost because of the financial crisis. we need to pursue the kinds of things that have created jobs in the past, investing in infrastructure, strengthening the manufacturing sector and supporting state and local government so they can hire more teachers and at the same time take steps so we address the deficit in the intermediate and longer term. >> dr. krueger, mpr did a week-long series on the incredible increase in disability in this country. i think we have 14 million people on disability and it pays $13,000 a year and you can't enter the workforce again once you take it and that's in the economy where they didn't do manual labor as they did years

ago and yet it is much higher. what does that mean overall to the job market? >> one of the factors that have been affecting that trend, there are probably many, but one is demographics which i alluded to earlier, we are becoming earlier. at the same time, speeding up job creation will have many benefits for our economy. that's yet president remains so focused in trying to invest in our infrastructure to make us more competitive in the future. >> finally, dr. krueger, after the ism disappointments and the housing numbers not as hot as they were and certainly not after today, there is this notion out there that q-1 gdp will be nothing more than a rebound from a pit ifl q4, and i just wonder if you think the bulls who were upping their forecast to three were a little ahead of themselves? >> you know, i'm focused on the longer run, frankly. i'm focused on doing the kinds of thing weise can do to strengthen the economy and

working with the congress to prevent them from inflecting wounds on the economy and then that strategy will lead to gdp growth and faster job growth. >> dr. krueger. >> thank you. >> alan krooger, the council of economic vezzers. >> rick santelli has an opinion on this number. >> i do have an opinion on this number, jim. we have counter fit growth when it comes away, you experience real pain. >> sooner or later it always catches up with you. if you look at ten-year note yields and just think back to the months and months and months of conventional wisdom that the dumbest people on the planet were the people buying fixed income or government securities. if you open these chartsup, the tens and the 30s from the 31st of december, what you'll find is pretty much every maturity including these two are now at lower yields than they finished off last year. the ten-year finished at 176 on

the first of december. the five-year was at 72 and the two-year was at 25. so we are now lower across the curve. if you look at where the real movement overnight happened it was the jgbs. wow! let's see they went from mid-50s down to 32 basis points and they roared back to 65 basis points and basically closed unchanged around the 53 basis points. it used to be news when the jgbs had a two basis point range and if you look at the nikkei you can see it's a whopper of a rally and it didn't een close on the highs and the dollar yen continues to escalate as the yen loses ground against pretty much every currency. back to you. >> thank you, rick. >> dr. krueger blaming congress. no urgency down there whatsoever. let's check out the latest news on the energy and metals. sharon epperson. >> we saw gold have a nice

bounce here on this weak jobs data. so much weaker than expected and it caused gold prices to come up about $15 and we're at $12 right now and this is from a ten-month low. oui seen extreme weakness in the gold market and just this week gold is down 3%. silver down about 5%. the question is now with the jobs data will we see more stimulus coming? we're also looking that the time in the quarter where some money managers still may be deciding where they're going allocate assets and that can be positive for gold in light of what we've seen in the profit-taking in that market. in terms of oil prices and they are lower as well on this weaker jobs data and we have february crude oil imports at the lowest level since march 1996 and that's a data point for u.s. futures that a lot of traders were watching. >> still ahead. he helps manage their 240 billion, and goldman's chief

economist will give us his take on the jobs number and i don't think his forecast is too far off in terms of the street and they'll be with us later on on post 9. the ten-year, too, worth watching since its lowest levels in december. back in a minute. [ male announcer ] what?! investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees

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big jobs number today showing an addition of 88,000 jobs last month, well below expectations and the biggest miss in about two years. the question is did you nail the number? this week we asked you to tweet us your predictions for nonparm payroll and if you're the lucky winner you'll receive an ipad

case autographed by the squawk on the street gang. we have found a winner. >> really? and for someone to come in with an 88 they had to be thinking outlier to the down side. >> it had to be bernanke's assistant. >> that would be an interesting story. >> would that tell you everything? >> it's still going to be dr. krueger. >> no. that was a challenging interview. >> give them credit for coming on and getting them to be specific was tough. >> that's the question with anything, but the same answer. >> look, they're political people. they're not people who have to immediately say, listen, i'll change everything. they're not going do that. >> they might have been able to give us something. something. >> it didn't happen. we got nothing. nothing. >> okay. we got a tease. there you go. first of all, don't go away, there's a herc ck of a lot more

>> coming up, cramer is kicking it into high gear. his six stocks in 60 seconds will energize all of us. get your jim jolt when "squawk on the street" returns.

dow's on track for its worst week of the year. we still have to do "six in 60." what about terex? >> this is your honor eeuropeans like it makes sense. >> citi says buy hess. it has elliott partners being involved and i want to look at the stock below 70 and the movement is not done yet. >> one we wanted to do in the earlier part of show. kimberly downgrade. if it got to the point where the yield is good and you'll want to be there. >> the stock doesn't go down and i'm a believer that if they can dominate internet tv someone has to pick it up. >> morgan stanley reinitiates by

blacksto blackstone. they're doing a tremendous job and i like the stock. they're very smart people. >> the price target stuck on cash. >> you know the guys will take the stock down to 79 and then you want to buy it and that is an alternate universe. >> going into a friday session. how treacherous today? >> i think it's a very long day. >> yeah. >> and i think there will be people who midday will say on monday we'll have worries about japan and worries about europe so i'm going sit it out and wait to buy on monday. i don't think that's a bad move. >> yeah. what will you do tonight? >> i had a guy who will come on the show, soros, he is doing the nation's hostile takeover. real estate investment trust have been the best performers, high yield, what i like. they're boring. i don't care. they make you money. i'll tell you, he would look better if he had that right

there and he'd be my guy. >> and then it would be the cramer off. >> enjoy basketball. >> louisville. we'll hold you to it on monday. >> thank you. >> we'll reveal the ten reasons this market is overbought. you cannot afford to miss that. goldman's jan hatzius will join us when we come back. back in a minute. everyone's retirement dream is different; how we get there is not. we're americans. we work. we plan.

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breaking news. we are look at a lot of red on the screen after the jobs number came in below expectations. we have jan hatzius exclusively coming up, but in the meantime take a look at dow down 165, not quite the worst session of the year. we were down 216 on a day for the dow back in february, but we'll certainly keep an eye on what is miserable breadth around the markets and all ten sectors lower and robert frank is with us for the hour and we'll talk some things other than jobs, too. >> related to jobs we'll talk about the wealth effect. going into today there's discussion that maybe rising stocks and rising home prices would translate into more spending and americans feel better and the wealth effect is coming under question this morning and we'll take a look at

why that's happening and how it relates to jobs. we have a budget coming from the white house and we'll have it for the wealthy and it's good to have you here all day long. >> thanks. >> the economy adding 88,000 jobs in march and that was well short of expectations and steve liesman has details on what he's calling a miss and on squawk, he said he would not jump from the window sill. >> i would never jump from the window sill. dive is the way to go. >> right. >> really, a big debate going on about why job growth was so weak in march and what this means for the outlook for the economy and let me give you the commentary coming in by the minute. the cyprus reigniting of the eurozone problems and sequestration not taking effect and uncertainty that that's created. the payroll tax hikes kicking in and late refund checks and we'll

explain why that might have shown up. there's the march jobs number up 88,000 with an estimate of 200,000. that was the consensus and the revisions did it over the past three months and unemployment rate down a tick and the participation rate fell to 63.3, a multi-decade low and 34.6 and that was one of the countervailing facts in the morning were unchanged. private sector just adding 95,000 and sers, that's a weak number and we need that number to be well into the near 200 to have good job growth. retail, that was a good story. down 24,000 and we've had the weak retail reports that have come out and is that the payroll tax hike, up 20 and there's government once again losing jobs down 7,000. the most worrisome theory is that it goes along with other weak reports and signals a downshift in the economy like we had last year and backing up

that idea, details in the survey and in the reports that like half a million americans who left the workforce. you can't look inside this report and find optimistic stuff and that says this month was just payback from the strength of 268 in february and could be revised up also. even with this, right around 170,000 and with the volatility in the number, carl, that may be one more way you want to think about it. >> we are closer to 6.5% unemployment and what does the fed do with these numbers today? >> i think the fed has gone through pains to say it has not been automatic about the decline of the unemployment rate and it will look inside these numbers to look at the quality of the decline and people are leaving the workforce and it's not going to look at that as a good number or as a reason why it's going to be concerned about inflation ticking up because we're into a

tight labor market. charlie evans said yesterday in diton, he does not see concern about a wage price spiral in this environment and he pointed out that, hey, if the job market improves these people come back into the labor force you could have an increasing unemployment rate with strong, monthly job gains. i think this lower the chance of a summertime reduction in qe, but that's still on the table if we get a rebound in the month of april. >> steve, important day. steve liesman at hq. >> let's get more on the morning's jobs report and how to bring in david kelley and diane swonk with mesereau financial. david, let me start with you. has this number changed for the u.s. economy and if so, does it change the way you change clients doing the way they do

equities and fixed income. >> we have seen weak numbers during this week in the adp report and the ism industries and overall what we've got is an economy that is doing surprisingly well, given the amount of physical drag. i do think the wealth effect is important and the real consumer spending group by 3% in the first quarter and that may lead to more jobs down the road and overall, we have a moderately growing economy, but given where interest rates are, you have to be overweight equities. >> you're not worried about earnings? >> this is not a good number. many people will point to this and i want to get to diane and get her opinion. i have to be worried about whether this multiple expansion will be borne out. >> we've seen corporate earnings rise to a record high since 2009. so earnings can grow gradually even in a slow economic climate and we think earnings will grow 4% to 6% and given how low interest rates are, that's a key

point in all of these financial markets, given how low interest rates are, i think you still need to be low equities. >> diane, let's tack the question, payroll tax effect or sequester. if it is the latter, what are the coming months going to look like? >> it's not the sequester and the u.s. postal service had 14,000 jobs there and people retiring out early as they cut back on the u.s. postal service, so that's not the sequester. one extra fact rather than the payroll tax kicking in and we know same-store retail sales were very weak during the month of march with 20 to 30-degree average temperatures and where you saw the job losses in clothing and apparel, we know auto sales on the flip side were extremely robust during the month which aren't as sensitive and more confidence to buy.

we saw losses in the building and garden supply area and that is gardening, lawn care and all of that stuff that usually picks up on a seasonal basis in the month of march did not show up so there was a cold weather effect and a chill there. of course, we had the headwinds as steve noted on the sequester going forward because that's when we hit it in april and may, when the government needed to have furloughs and layoffs kick in. >> is this enough to restructure your forecast for gdp? >> no, i had 3.5 in the first quarter and in the second quarter i have 1%. so i had a pause because of the huge hit from the sequester putting a blow to government spending in particular and we are expecting some government sector losses, and i do think steve hit the nail on the head and this will put fodder and the fed arguing to continue the asset purchases and keep the spigot going in june. and i do think we will see that.

i was there and heard charlie evans and he's not about to back off and you're really seeing this kind of evidence is not enough. the quality of the job gains is disturbing with the exception of construction which is good news. the rest of it in the areas that we continue to see food preparation and inhome preparation. that's another issue, the quality of the job gains is what the fed is concerned about. >> it doesn't seem like we entered the spring where we haven't had a lot of different things to contend with as we've come out of the first quarter, and are we ever going to get out of the cycle? i think there is distortion in the seasonal factors because of what happened in 2008 and 2009. i do want to emphasize that a lot of these numbers may be seasonal factors and each of the last three years we talked about could we stall out and have a double dip recession and that was the big question for

financial markets and so we have a pause and that may unfold, but i think the economy will strengthen later on. later on the growth picks up a bit and profits will continue to grow and until the federal reserve oar on it's like an elephant sitting on the long end of the yield curve, and i think bonns just aren't attractive. >> finally, diane, we mentioned the effect and these earnings numbers year over year not keeping base what is relatively tame inflation and that's pretty miserable. >> think the earnings numbers, i'm with dina, and i think the earnings numbers will be okay and i am encouraged that we will see actually a second half of the year gain and what's interesting is what is fueling consumer spending right now and it's not robust income gains although we did have income in 2012 that did fuel gains in

january and on the other side of it we've had refinancing activity pick up and they're under water in the mortgages and that's creating $200 to $300 a month and there are 2 million of those harp refinancing candidates still throughout to 60% on their mortgages and that's a big move out there and those effects along with housing prices going up and we accelerated in the second half of the year. >> those who haven't done it is getting extra team. >> cheap money, i guess, the key theme from both of you. diane and david, thanks to both. >> killa is watching financials and that will be key all day. >> they're weighing heavily on the banks and they've off the lows that they saw during the open and financials are the second worst performing.

si group faring down below the bottom of the barrel and if you take a look morgan stanley is down a half a percent. citigroup, 1 3/4% and wells fargo toward the bottom now at nearly 2% into the red. three reasons why this is happening today, though. the first is the biggest picture and the most important. if fewer people are unemployed and they're borrowing new loans and they're the lifeblood for major bankses and the second is the fed and until unemployment hits 6.5% and it inspired little hope that that number was in close reach and low interest rates have been with the fed indicating it will purchase those assets and it can't make money when low interest rates are here to stay, but if you dig into the report, it shows that march was the first month since mid-20 len that the financial sector actually gave up jobs. the bls report says 2,000 jobs were actually lost in march and that's after two years of

financial hering in a steady trend. it upons banks to be building anding their,es and notes consumers borrowing and spinning and that's the one-two punch hitting stocks. >> stocks are getting hit and we have the s&p down 1.2% and we have earnings next week and things will get choppy. we'll break down some of the warning sign, head next. >> later, jan hatzius, chief economist at goldman sachs will join us on post 9 and he'll give us his take on the jobs report. it is a cnbc exclusive. "squawk on the street" coming right back.

that's some weak breadth right there. just a string of green and on this down day, one stock is in the green. josh lipton. >> here's one enjoying a pop. hanes brands now forecasting first quarter per share earnings to beat the street's estimates and revenue will be lower than expected. the retailer, though, also did initiate a quarterly dividend and the street reacting and steve races his price target to 53 bucks and up nearly 30% this year. back to you. >> stocks as we said are selling off and warning it could get worse after earnings keck off next week and sema moti is at the nasdaq taking a look at the

red flags. >> another factor weighing on the sentiment is the upcoming earnings season which will begin monday with alcoa. there have already been 107 negative eps plea announcements issued by corporations for q-12013 compared to 23 positive eps3 announcements and by providing to 103, if this persists a dorgd thompson reuters, it will be the negative-guided sentiment since q-3. they've come in cyclical areas which includes information technology. in terms of today, the nasdaq having its biggest one-day drop since february 20th on the back of the disappointing jobs number and the composite trading below 30 to 100 which is a key psychological level that traders watched and large cap tech stocks across the board. we're seeing google trade below the 50-day moving average and social media also trading in

negative territory even after facebook's strong move to the upside when it made the mobile phone software announcement. f-5 networks after the second quarter outlook, shares of f-5 getting downgraded from the likes of citi, william blair and that stock down about 90% on the day. david, back to you. >> thank you very much, sema moti. let's go to the trading pits. >> let's take a look at what's happening in the energy sector because fewer jobs being added and the low job partes pagz and that will mean fewer drivers on the road getting to work and that's one of the factors that are impacting the weakness that we're seeing in the oil sector and energy prices. we have lower crude oil and lower gasoline and lower diesel prices, as well and we have seen a bit of an uptick in diesel demand and that will go away as

there are not many drivers on the road and if there are not as much jobs being created in terms of the week that we've seen in the oil market and we've seen the oil prices under pressure, when we have the bearish inventory data from the energy department. add to that there was chatter that we may see the fed starting to pull back on the easing measures it and that contributed to the region and the employment data. we're also looking at brent crude prices that are under pressure due to technical selling and we're looking at the lower prices in the brent crude market since last november and perhaps here at this level might present a buying opportunity below the $105 a barrel level other ands are still wary about perhaps further weakness in the oil market and we're also looking at natural gas because natural gas is bucking the trend and it is up 2.5% above the session around $4 right now. we did get a bullish report on natural gas storage levels

yesterday and we're also looking at increased heating demand because it still is very cold in many states in the northern part of the country and that is a factor helping to lift natural gas prices. >> robert frank will break down what today's sell-off mean for the wealth pep that's next. goldman sachs' jan hatzius will give us his exclusive reaction to today's jobs report. the jobs report is out. >> march non-farm payrolls increase by just 88,000 jobs. >> were you able to nail the number? if so, you've won this ipad case signed by the entire "squawk on the street" gang. find out if you're the lucky winner later on "squawk on the street." you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz.

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as you can see, 29 of the dow 30 in the red. the only exception is unh. after the jobs number came in

well below expectations of the session low, dow 171, currently down 148 and robert frank is here to tell us what today's number may mean for the wealthy. >> there was a rising debate among economists of how strong the wealth effect might be. the wealth effect theory states for every dollar it goes up, we have 8 cents of spending. that would create jobs and of course, the virtuous cycle would repeat. that is not happening and especially we're seeing not today. so why is this the case? some are going to say, look, this means the wealth effect is a myth. we have two wealth effects right now. we have a wealth effect that's on housing and the wealth effect on markets. let's take a look last year, home prices went up 7%. they are still 30% below their highs. so, yes, people who rely on homes for their wealth which is most americans are still feeling less wealthier than they were.

the top ten of americans own 80% of the assets and those folks were at all-time highs and plus they can actually sell stocks to buy things. so if your wealth is liquid as in stocks then you indeed are feeling a stronger wealth effect. >> we have two wealth effects right now and two economies and the wealthy and those who make their money from financial access and capital gans are feeling better and are spending and that's not enough to make up for the 90% who are still feeling below on their houses. >> the wealthsy do the lion share of spending in the country and i keep thinking back to cramer's gatsby index where they have the coaches and tiffany's in a basket because that's where the activity is right now. >> right now there are too many uncertainties with washington, and with what's happening overseas and north korea. they pay more attention to those macro uncertainties than the everyday people and i think that's why their confidence is just not there right now especially as we're hearing more

talk about tax increases in washington that will make them even more nervous. >> we're closing loopholes at the very least. >> you're just a litany of good news for the wealthy. >> no. i think that we have two economies right now. as dave kelly mentioned earlier. profits and capital for companies and cash has been strong throughout this recovery even as unemployment has remained high. today just highlights these two economies that we have right now. >> always a high-class problem. >> yes. >> we like to end every segment that we know. robert, thanks. stay right there. nice tie, too. >> thanks. >> jan hatzius will join us and he'll be right there next to carl and give us his exclusive reaction to today's jobs number. "squawk on the street" is coming right back. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years,

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welcome back to "squawk on the street." the strong sea of red, the dow down 138. 88,000, well below estimates and all ten s&p sectors are lower as investors try to digest that dismal number and sticking with the sell-off, we want to get a check on the floor of the nyse. bob pisani. what do you have today? >> that's not saying much, we've had an incredible year. take a look at the s&p for the week and i'm talking for the week. we're talking 1.7% with 30 points off of the high.

1573 or so? just on tuesday, and that was april 2nd and we're pretty close to the highs. i'm surprised to see that. the biggest volume this year has been on the down days and not seeing that today. >> for today, it's the same pattern as all week. in fact, for two weeks now. defensive names have been the ones being sold here. so financials, discretionary, materials and technology. this has literally been the story for two weeks today. so in a sense this is a continuation of the trends that we've been seeing and it's been a lousy week everywhere for the stock market. the biggest declines were today and the s&p today down 1.8%. china's been weak. germany's been weak. south korea. brazil's near a 52-week low right now. this is the week for bond funds. forget about the great rotation, folks. take a look at the agg and this is one of the great etfs for the bond and the bond classes. that's at the highest levels since the end of last year, we're almost surpassing new

highs for the year and the tlt is what you would want to own if you were to own long-term treasurys and this is an exchange-traded fund and this is the third day in a row and the highest levels this year. in flows you will see this week into those bond funds. back to you. >> we'll be coming back to you quite a bit today. >> 88,000 jobs added in march. the smallest rise since june of last year. is this a sequester and a payroll tax increase? jan hatzius joins us. good to have you. >> good to be here. >> i would say happy friday, but it's not so happy. >> the number was on the low end of the street, i believe, and directionally, at least, probably more right than a lot of people and this was a surprise. >> on the payroll side it was weaker than expected and on the household survey side it was weaker than expected and it was down pretty sharply and of course, there, you had the impact of the declining participation rate which led to the unemployment rate actually

printing lower than most people and it is consistent with the slowdown in growth as we enter the second quarter. that is in our forecast, and we were expecting q-2 and q-3 in 3.5% in the first quarter and it is a signal that's pretty much consistent with what we're seeing. >> is the year so far essentially payback for how weak q-4 was? >> overall, the news has been encouraging and i would still say that even after the latest batch of weaker numbers, but, yeah, there were certainly a decent amount of shifting between the fourth quarter and the first quarter. >> what are we to make of this labor participation rate and perhaps we dwell on it too much. dr. krueger joining us saying it's demographics, but is it really? half a million decline. that's a lot.

>> think pure demographics explain a relatively small share of what we've seen in the last year or so. so the aging of the population by itself accounts for about a .2 decline on the participation rate on the annual basis. so it's a little more than that and to me it seems like there is some discouragement and maybe some expiration of emergency unemployment benefits and people might be dropping out after those benefit comes to an end. i think that is a factor, but it is a surprise. it's definitely been weaker over the last couple of months. >> jan, you mentioned stronger growth in the first quarter and that has been in the playbook for at least, this would be the third year in a row and are we sort of following along in that same tradition? >> think we are following something like that over the next couple of quarters though

for different reasons and in the past few years, seasonal distortions played a bigger role in that second, third quarter slowdown and this time it's more the inventory cycle and probably also the sequester. >> the sequester. you said before the number came out it would probably account for 10,000 jobs and it might be a slow burn and we might feel the bigger effects. >> iffing any, less than 10,000 jobs. >> really? >> if you look at the federal government category that was down 14,000, but most of that was due to the post office and that's not sequester-related. so this report probably didn't really show a whole lot of sequester impact, but the next few reports probably will show more, probably 20,000, 30,000 type of numbers and it will probably go on for a while. now that is going to be in the category of the employment report that will be relatively

easy to identify, and i think that will be important for the market, but it will be a drag. no question. >> there was so much on the housing recovery going into today. construction reports were okay. >> what do you make of the housing and the role of the wealth effect that people would start spending more? >> i don't think that story has changed. i still think that housing is recovering at an impressive and you know, very pleasing kind of clip. i think the somewhat weaker construction employment number today was spraps perhaps somewhat related and there was a sizeable drop in civil engineering which tends to be outdoors and is often more weather sensitive than other sectors and that might abe bit of a clue, but in general, housing is moving up and that's providing a direct positive impulse to gdp and it is a positive wealth effect. i don't think it's enormous, but it is helping at the margin and

i don't think that's where the slowdown coming with the gdp numbers. >> it's hard not to ask you about japan and the conversations that you're having about kuroda and higher? >> i would say the latter. i think they are catching up to what the federal reserve has been putting place over a longer period of time. they're moving very quickly, but of course, they've also -- they also only started very recently, but i think it's the right call to ease monetary policy when you have deflation. >> some looked at the bond action last night and think that the market is not going to follow them necessarily and maybe not until buying actually begins and it was that worrisome. >> financial conditions are easing pretty aggressively and have been easing aggressively and that's what we want to see as the central bank easing monetary policy and it is easing through, in my opinion and we will see to a greater degree in

the real economy. it doesn't mean japan doesn't have any problems anymore. the demographics are very bad. fiscal policy is going to be a sizeable drag over the next few years, but taken by itself issue the monetary policy moves are a very positive sign. >> back to another central bank that continues to buy a lot of bonds, i would assume and i don't want to be presumptuous that we'll stop talking about the end of qe in my view. >> seeing the spring slowdown and looking at the numbers that have been coming through over the past few books, we won't hear much more about the next two weeks or the next couple of months. of course, two poppings from now the there will be more talk about it again in, vittably and

q-1 will run at the current pace. >> you've been stubborn on that for a while. >> i've been a little stubborn there. >> it's looking right so far. >> jan, thanks for coming by. jan hatzius. >> our own jim cramer had interesting words to where to place the blame in the last hour. >> i do think that this is on washington, now you could say some of it's europe and some of it's china. i think this is a washington, and that's why i blame this number on them. >> do you think this is a sequester effect? the payroll tax and the increase for the rich. >> this as president obama gets set to announce his budget proposal this week. let's bring in john harwood. >> reporter: good morning, david. this jobs number will play directly into the political arguments as jim cramer suggested, and as jan hatzius suggested a moment ago when he

talked about how sequester may have had a modest effect on this jobs number, but it will have more over time. that matches what president obama has said over and over including at this press briefing earlier this year. >> the longer these cuts remain in place the greater the damage to our economy. slow grind that will intensify with each passing day. and then right on cue, alan krueger, he ratcheted up that criticism of washington echoing jim cramer. >> the economy's continuing to heal. what we need to do in washington is avoid self-inflicted wounds. most importantly, they y isequ, the congressional budget office estimates it will reduce job growth by 750,000 full-time equivalent jobs by the end of the year. >> how does that affect the budget debate? look, the house and senate have both passed partisan and dechl

democratic budgets. president obama is coming in next week with his budget proposal and he's trying to go down the middle and spur compromise talks by embracing some of the entitlement cuts that he's previously allocated privately and also calling for republicans to accept tax increases. if that happens, they will replace the sequester impact and back load. some of the spending cuts which say are need, republicans say are needed, but the administration says it shouldn't happen right now is the consensus among economists. the question is whether or not that will spur the negotiations that could produce a mini version of what we talked about. >> i spoke to eric cantor earlier this week and there was a moment when he seemed to be opening the door by saying if the president shows he's serious about entitlement reforms, we'll see on the tax issue. later he stepped back from that and said no, the house can't pass tax increases, and you

can't always take those initial bargaining statements at face value and the question will be over the next month or two before we get to the debt limit this summer whether or not oui got a real negotiation and prospect for a deal. >> oh, boy. debt limit already. jo john harwood, thank you. we're down about 1% right now and a number of tech names are starting to show signs of life. zynga's up, netflix is up. if you take a look at the week you'll see the stock actually was down and questions our own josh lipton and a number of people were, you know the stock was the best performer for the first quarter. you want to take some risk off before a jobs report because you think things may be getting squished in the economy and maybe you go to one of your biggest winners and that's one of the reason yes netflix had a sell-off this week, but

interestingly, once we got the jobs report, i have caterpillar up, carl, jc penney is up and a little bit of green. >> a lot more than the open. speaking of, josh lipton. >> yeah. best buy, enjoy that monster news. remember, it would offer space in its doors to create samsung boutiques. they said that move yesterday was an overreaction. they expect best buy to continue facing competitive pressure in the mobile business from carrier stores and online retailers. s&p says this one is a sell. best buy down about 2.7% right now. david, back to you. >> all right. heck of a day yesterday. thank you, josh lipton. coming up, more market reaction to the dismal march employment report and we have veteran art cashen. >> and randy crossner and david rosenberg will talk jobs and lay

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one thing to keep an eye on today, the yield on the ten-year treasury earlier it fell to an intraday low and not just for the year, but december 12th when it was at 163 and it will definitely be a tell. >> cheap money, wow! that is something. let's talk about the employment number. we've been calling it dismal all morning. yeah. it's close to that. let's bring in art cashen. dismal the right word? i think dismal is in. you have to give them some credit for the preceding couple of months and that didn't take it too far off, but again as jan said when he office earlier that trying to blame they is qwester doesn't quite fit in with the government job losses that you

saw. so we'll have to wait and see. this is a whole other series of weak data that we're getting and people are beginning to wonder whether the economy is again, hitting back to stall speed. where are we going go? >> we've been talking about this. we've seen this movie before. last year, year before. what does it mean in your opinion if, in fact, it is following that pattern for the market? >> i a lot of the traders think that what you may have seen with the disruption in 2008 and the post-lehman environment that the numbers became so distorted that the seasonal adjustments were fully disrupted and that it's taken us years to try to get back. so it's sht not so much the spr seasonality itself, but that the numbers are distorted. that's a reminder echo and that's going to make people feel somewhat uncomfortable. as you said, we've seen this movie before and is it going to happen all over again. >> does it do anything to the

notion that global money will come here? that you're still the only game in town? >> so for that's a supposition. we haven't seen the money run in and out and luckily there have been no signs of follow-up bank runs after what happened in cyprus, but there is a fill soffic conviction that this remains a nation of laws and if you want to have your deposit not invaded, one of the most likely places to put it is in the united states, but we'll have to wait for the treasury flows to see if that is coming in big. >> what about this argument, though? 169? we just saw it on the ten-year. you can't put in fixed income and you have to put it in equity markets even though the economy is slowing. >> carl and i had discussed over the weeks that that's part of the reason that this has been a reluctant rally. this has been a hold your nose and buy equities. i don't really believe it. again, if you look at the macro

side of thing, gdp and whatever, the market is way ahead of itself and if you look at individual corporate earnings it's right on target and now can the management of american industry be creative again and do more and more with it less and less. we had record profit margins, and is it your sense that earnings season is going to be rough or not? because in terms of warnings, it has -- the ratio of upside to down side guidance hasn't been great, but not a lot of clarity out there yet. >> as you move along, you might not find just the earnings itself, but the forward-looking projections will be there and particularly if we find out that corporate america is as surprised by the weak numbers, and euro will call it a day. the unemployment numbers are historically always tough.

we sold off a lot and will we continue that trend today or will they return? they're trying to circle the wagon right in here. what is key for the viewers to notice is that on the cocktail napkin charts, 1538, 1549 in the s&p, so if you close below 1540, that's going to be a little disruptive on the charts and bring out more barishness, so if the bulls need to defend an area, that's the area to defend. >> good luck. they don't stand a chance. >> rick will react to the jobs number as only he can. >> randy crossner will take his stab at jobs, too, when we come back. a confident retirement. those dreams have taken a beating lately. but no way we're going to let them die. ♪ ameriprise advisors can help keep your dreams alive like they helped millions of others. by listening. planning. working one on one. that's what ameriprise financial does.

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. welcome back to "squawk on the street." rick santelli here. boy, it's been a long week. and if you're jgb, japanese government bond trader, today was a long year. obviously the post more tum on the bank of japan, really not a bazooka. their announcement put a boat load of volatility in the market.

wee see the stock market continuing to wind up. in 199 it was a whisker shy of 40,000. that bubble left a footprint that we may not soon be able to find another foot to put in any time soon. things like bottles will experience it. but the real issue was everybody's shocked response as to how weak the labor force was. i know politics changes everything. remember all the politicals speaking about the drop in unemployment rate right before the surprise drop before the election. now it was great news. i was there with some others. talk about labor forced precipitation rate. nobody wanted to hear about that. today that's the big story, and the sequester, and many experts whom we've had on our show have all pointed to the fact that it really isn't the big deal. here's what is a big deal.

minus 496,000 disappeared from the labor force. that's a big deal. new fresh 30-year low. steve liesman and i got into a it a little bit. i guess i owe him an apology. when government spending does stop, we do see the numbers go down. it's because it's like counter fit money. if i pay the mortgage and pay for my kids' college, when they figure it out, they throw me out of my house and throw my kids out of college. there's a great book. currency wars. right after the stimulus, you know, let's go back in time no '09. christine romer and jade bernstein projected a multiplier to be 1.54 for every dollar of stimulus. ab a month later, less than one. the final research of 2011 is that number was about 0.46, which means it's shrinking.

so steve, you are right. if we're going to keep spending money that we don't have, the more water you get in you do get a little out the other side, that's the way to go, no. we have a structural problem. yesterday i really enjoyed the interview. we have a structural problem. things are broke. people don't have the skills for jobs. they're not going to magically get more educated to be able to work the job. we need an appropriate medicine for what ails us. this report really supports that government spending gives you a pump the pipe is broken. the water goes into the ground. the debt lasts forever. it's not a good scenario yes. back to you. >> thank you, rick santelli. let's look at careerbuilder.com's cities with the highest employment. in fifth place, san antonio, texas. in fourth, portland, oregon. third, san diego, california.

second, minneapolis. and in first place with 18,934 jobs as well as 27% job growth is -- there it is, austin, texas. yes, indeed. >> still ahead, facebook shares in the green after the social network's big phone announcement yesterday. we have the first person to interview mark zuckerberg coming up. then the ten reasons after 122-point selloff, the market is still overbought. that's coming up. welcome to thew new york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started.

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ally bank. your money needs an ally. some sad news this morning. pulitzer prize winning film critic roger ebert died yesterday afternoon, just two days after revealing the cancer returned to his body. he's on the front page of the paper there today and influenced movie goers across the nation. i got to meet him when i was just a kid, 14 years old. and we stayed in touch through college, after college, my first job in newspapers. >> so he influenced you? >> a huge mentor for me.

it was a tough day yesterday. he's had a rough go for the past few years. >> such a great writer. he believed people should go to movies to experience people other than themselves. people who were different. he wrote 300 reviews a year. we forget that because he was on tv so much. >> even with setbacks with his health, he embraced twitter. he has something like 800,000 followers upon his death. and he always embraced what was new, what was changing. he will be missed. roger ebert passed away at the age of 70. robert, we're going to see you later on. have a great weekend. if you're just joining us, here's what you missed. >> welcome to hour three of "squawk on the street." here's what is happening so far. >> there's a lot that two sides agree on in washington. for the life of me, i can't understand why we don't see the

white house come forward and em blas the things that we agree on. let's get them done. >> march, non farm payrolls increased by 88,000 jobs. >> i do think this is on washington. you can say, well, some is europe. some is china. i think this is is washington. >> you think this is a sequester effect? >> yes, i do. >> opening bell this morning. >> the economy is continuing to heal. what we need to do in washington is avoid self inflicted wounds. most importantly the sequester will reduce job brout by 750,000 jobs by the end of the year. >> there was actually a cold weather effect and a chill will. of course, we have the head winds going forward because that where it is really headed in april and may when the government needs to warn the workers when furloughs and layoffs kick in.

>> this report didn't show a lot of sequester impact, but the next few reports will probably show more. maybe 20,000, 30,000, type of numbers. and it will probably go on for a while. god friday morning. keeping our eye on the selloff today, seen on the back of the march unem ploim number. 88 sthourkz well below estimates ch the biggest miss in zest mats in about two years. the dow is down 122. obviously off the lows but down almost a whole percent. s&p 500 down almost 15. as we come back a bit from this morning's deepest losses after the job's numbers, investors may want to start thinking about positions for earnings season, which is not far away as well. rich bernstein is the ceo of

bernstein advisers. always good to see you. good morning. >> hey, carl. >> this was pretty weak. even though who try to look at trends or three-month averages were thrown for a bit of a loop. how about you? >> yeah, certainly the payroll number is terrible number. i don't think you can spin it any way. although i don't think overall the report is quite as bad as some people are reporting. only because the leading indicators in the report, things like temporary jobs. things like the workweek, both hit cycle highs. it's hard to get too upset when the leading indicators in the report are hitting cycle highs. certainly it's a terrible report. but if you're an investor and want to be forward looking, you have to look at the indicators. >> it's not the only number we have lately. ism is amiss. confidence is eroded. the housing numbers haven't come in as strong as one hoped. a lot of the economic bears want

to argue, we're really only making up for how bad the economy was at the end of last year. >> yeah, well, certainly the data is more mixed. there's no doubt about that. i'm not trying to be a polly anna and say everything is wonderful. it's not and we ne that. the question has an investor that one ha to act is do you think the economy will continue to improve over the next 3, 6, 12 months. now it's not a question of how muchst going to improve. it's not a question of the absolute numbers being wonderful. but if you think the economy is going to continue to improve, you should be reasonable by optimistic. i think that's the right way to think about this. >> if that's true and you buy this notion, sounds like a recipe for buying what has already worked. what do you do?

>> well, there's something very interesting going on. people talk about how the first quarter was a very defensive quarter. things like consumer staples and health care and utilities did well in the first quarter. that's true in the s&p 500, which is really dominated by multinational companies. as you go down in size to mid caps and small caps, you find the defensive rotation dissipates and small u.s. companies were the best performing asset class in the world in the first quarter. so they're very domestically oriented. so a lot of the defensive rotation that people are talking about are really much more because of fears outside of the u.s., the depreciating dollar, weakness in nonu.s. economies. that's really the cause of the defensive rotation pause you're not seeing it quite as strong. you're seeing some of it, but not quite ads strong. >> so the small caps are still your favorite? >> they still are. i think -- my long standing story that nobody will believe on a day like today has been

that the we're in a u.s. decade. and if you want to believe that and believe we're in a u.s. decade, you want to play domestically focused u.s. stocks, which naturally brings you down in size. >> that brings us to one last story today, and that is japan which we have to always talk ab with every guest we have. the box that is opened looked dangerous. is it? >> i'm not sure it's as dangerous as some have made it out to be given the extreme overhang of deflation. but just taking a pure investor point of view, several years ago we did work that showed there's a good inverse relationship between the yen and the japanese stock mark. many reasons why that happens. they're an exporting nation. their companies are more exposed than a lot of other nations. and that's playing out.

so if you think that the yen is going to continue to weaken, you should be reasonable bull on japanese equities. i don't think one should read too much more into that. >> up 48% since november. now the question is how will the fed react to the jobs number today? boston federal reserve president commented the job market weakness warrants aggressive fed action. joining us to weigh in, randy kroszner. good to have you back. welcome. >> great to be here. >> all that talk about tapering was in fact premature. that seems to be the obvious argument. is there anything wrong with it? >> the fed is going to wait to

see their cover really come back. the green shoots have never taken root. they're going to wait until they get roots so deep they could withstand a chicago winter before they pull back. >> that said, as we tick down on unemployment, the rate, we do numerically move closer to 6.5% target. do they just ignore that? do they have to somehow change communication if participation drops? >> well, the chairman has been very clear that it's not the only indicator, and they're going to look at the quality of the unemployment rate. if the unemployment rate drops because fewer people are looking for work, more people are discouraged, that's not a good sign in the economy. the fed fully understands that. they were using that as a rough indicator. if the reason is because no one is looking for jobs, that's going to lead them to pull back. >> yeah, some are trying to

build, and i think they're probably stretching, randy, but they're trying to build some sort of bullish argument that a lot of it is demographics. people seeing housing values come back a bit, maybe being a little more comfortable going into retirement and that's why the rate is dropping. how much of that is true? >> you don't want to put too much weight on any one month number. we saw it drop 500,000 this month. now we're at a many year low of 63.3% of labor forced precipitation. you have to look at the longer trend. it has been downward. some of that is demographics. some is not good prospects for people in the market. >> if the data continues in this direction, the hawks on the fed, how many legs do they have to stand on if we do enter a seasonal swoon? the likes of which we have seen over the last couple of years. >> unfortunately we played the story a few times before where

we had strong job growth early in the year and then it feaded. i think it's hard to make a case that there's a lot of inflation in the pipeline. i think the people who are concerned about the fed policies are focusing more on the potential for market dislocations, asset price bubbles hean that's a good thing for the fed to be looking at. >> we were in a period where a lot of people were putting three handles on their gdp estimates. they felt we were in a different zone, housing had shown sustained strength. do you see the argument lives even after today? >> well, again, it's only one month's worth of numbers. you can say, gee, 60,000 more jobs were created than we thought. if you add that to today's number, it's not a great number, but it brings you to 150.

this was a groet op-ed saying don't put too much weight into one number. the revisions are literally 70,000 per month. >> eddie, as you call him, who made his name studying labor statistics, that's a great piece. and he's going to be on the show on tuesday. >> good. >> randy, thanks for your time on an important day. good to see you again. zbr great to be with you. >> jcpenney is up as much as 6%. what a weird story given the tape. >> jcpenney the biggest gainer in the s&p 500. just yesterday they were sitting at 52-week lows, at least in the morning. and what we know is today is the of the launch of a number of jcpenney home shops in several hundred stores. that's all that we know from jcpenney.

today and early next week. none of them in the noreast or in california, too. very big markets. we're working on sending a camera to get video of exactly how this launch is going at one of the stores in texas, which we should have in a little while. but most folks do believe the mds is better than what jcpenney had offered in the home offerings over the past couple of years. jcpenney's home department was the worst performing of all the departments. ceo ron johnson calls the launch pivotal. mentions the home launch almost in the same breath as the joe fresh launch, which we talked about that happened earlier in the month of march. that was more koocoordinated. home starting to launch today in several hundred stores. by the end of may it will be launched everywhere. that's when we really get to see

how much it's going to help traffic and sales and many home this is going to be it. if it's not, i don't know what they do next. >> great point. not just today. for the mon. some people are beginning to place bets here. we'll see. >> thank you. >> dow is finally down less than triple digits, down some 99 points. facebook unveiling the latest attempt to monettize mobile. we'll talk to the first person to speak with mark zuckerberg. first, rick santelli with a great exchange in the last hour. hey, rick. >> yes, we're going to have four minutes. one economist. and we're going to try to debunk of course that the sequestration may be added to the weakness in this report or the payroll tax

hike. the third will be labor forced participation rate. is it really because people are getting old and demographics? was the strength in february and january and the jobs numbers really sustainable? or was it faux? we'll look at all four and hear what jim has to say in about 15 minutes. >> the jobs report is out. >> march payrolls increase by 88,000 jobs. >> were you able to nail the number? if so, you have won this ipad case signed by the entire "squawk on the street" gang. find out if you're the lucky winner later on "squawk on the street." changing the world is exhausting business.

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take a look at tech today. one of the worst performing sectors with the dow down 101. sectors down more than 1% in today's section. down nearly 3% this week, and one particular stock dragging it all down. josh lipton has that. josh? >> you mentioned tech. it's the worst performer right now. within tech, the f-5 network is really taking a beating this morning. forecast second-quarter results below what the street was looking for. analysts say they were losing to citi, piper, william blair. other network gear makers falling as well.

>> one stock higher amid the red is facebook. after months of speculation about a facebook home. it's a an app that serves as a home screen replacement for android users. steve is the first person to speak with mark zuckerberg about facebook home and he joins us from new york. steve, good to have you. welcome. >> thank you. >> it's just a good interview. he answers your questions. >> absolutely. the first time i met him was in 2005, he could barely get a sentence out. he's actually grown into his 20s. he's still not 30 years old. he has grown more comfortable in his skin and he has fun. he says it occupies a big space in louisville. it's not quite an operating system. it's not just an app.

how do you see it? >> it's more than an application. it breaks the bounds of your normal way of accessing something by pointing to it and having it open. it takes over your lock screen and home screen. it also has the capability to be on when you're using other apps. in this case in communications there. zuckerberg thinks facebook is so important to people it's about 23% of users of people on phones, that people wan to have that before they turn their phones on. >> i've seen the statistics i don't know how many times today. average user checks a dozen times a day. checks their phone 100 times a day. not available on the iphone, though. hose users have shut out. how important is that? >> it's incredibly irony that google's biggest -- facebook's biggest competitor is google and they're adopting the google operating system because apple

is very protective of the operating system. it doesn't allow developers to do things lake take over the opening screen. >> let's talk about whether or not this is going to eventually be available on an apple product. sounds like zuck doesn't know. he said that's above his pay grade. whose pay grade covers that? here is the scenario that i sort of envisioned. google is going to respond to what facebook did. i think it's going to open it up and make it easier for other developers. so you will get your choice saying, gee, what do you want to have when you turn it on or go to your home screen? apple may have to respond to that if developers really like that and it becomes a big selling point. apple might have to think, maybe we should let them do this on

our system, too. that's going to unfold over the next months and even years. >> sometimes you're told what your choice is based on where the audience is. got breaking news here on jcp. what is going on? >> yeah, courtney reagan just showed you how shares were spiking today. the former ceo of jcpenney who has been quite critical of ron johnson took a tour of a new prototype store with john johnson in dallas about a week and a half ago and is speaking out for the very first time about what he saw. he does hope it takes off. he described ron johnson as delightful and energetic dur the tour.

of course, he said today, they're soft launching the home stores today. they did joe fresh what? a couple of weeks ago. so there's a lot going on. allen, who has been arguably the most critical person of ron johnson's tenure thus far actually took a tour with him. was invited. ultimately saying they are going to vote. great stuff, thank you scott. still ahead, a lot more on the big jobs number, the big jobs miss and the selloff on the street. and ten reasons why the market is overbought, even with a selloff. that's in triple digits. apple inching closer to bringing the streaming music service to the public. we'll look at what that could mean for the space later on. carfirmation.

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here's a look at the dow. obviously a very weak open as the jobs number was a disappointment this morning. murphy's law. you never know how the afternoon session goes. we have lost briefly the triple digit loss. it was a close positive for the week, though. we still need another 70, 80 points. we have breaking news. phil lebeau, what's going on? >> carl, we have received word that they will be notifying a large number of employees out in california that that will be laid off, giving them layoff notices today. we don't know the exact number, but this is the latest incident to show how weakened the state is. it has been struggling for some time. just a couple of weeks ago henry

quit and said these guys have no direction. they've been trying to work out a strategic relationship with another automaker but have yet to work that out. laying off a large number of employees today. carl, back to you. >> phil, thank you for that. phil lebeau in chicago. the offshore accounts of thousands of wealthy americans have been exposed. robert, that sounds like a juicy story. >> it is. and they are naming names. you know, it's being called the wikileaks of the wealthy. a list of 135 wealthy people around the world. including 4,000 americans. the list is part of a massive data dump called offshore leaks. now most accounts are in the british virgin islands. among those are denise rich, she's the democratic fund-raiser. the wife of commodities trader

mark rich. also on the list is the daughter of imeda marcos. and spanish baroness carmen thyssen-born now the overseas accounts are not necessarily illegal. these people may have done nothing wrong. this adds to the growing problems of offshoring. we had cyprus where people lost the money. so there's $21 trillion in offshore wealth, but, carl, it is getting a lot harder to hide. >> and no indication as to what the motivation was for parking the money offshore. >> no, and just to have an offshore account is not illegal, but after the romney situation it has a whiff of doing something wrong when you do

that. we're going to look deeper into whether the accounts were legal. >> interesting. thanks, robert. still ahead, worried that the rally is losing steam? david rosenberg has ten very specific reasons why the market is looking overbought. back in a minute. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪

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it's a holiday shortened week for the europeans. shares falling to the lowest level since the end of february f today's report comes in below expectations. the uk market. and the euro is rising sharply on those numbers. italy has been gridlocked since the inconclusive february election that didn't give any candidates enough votes to govern. berlusconi saying they should stay in. the chaos there to a large driveway still exists. bob pisani is here looking at what remains vulnerable as we come off the lows. >> and it was a lousy week for everybody, except for japan. the whole world was down 2% to 4%.

we're not far from that, but we're better than the other places. okay, we have a lousy report today. is the market vulnerable? of course it is, we're at new highs. here is the way i look at things. we're at 1.7% essentially. the last time we were here is what you want to look at. right here is where we are now. i forget about that one. that was the end of december. very end. we were at 1.7 in the yield on the tenure. so pull up the s&p 500. the last time the s&p 500 at that point, here you are, was about 10% lower. maybe 1,425 or so. comparably the s&p 500 was 10% lower when we were at 1.7% yield on the tenure. that doesn't mean it won't head in that direction. so the risk is on the the

downside. not in any head we don't start with alcoa. i'll tell you why. alcoa is directly tied to aluminum price. look at what has been going on in aluminum. we're at 52-week lows in aluminum. it's directly tied to the aluminum price. take a look at alcoa. they are sitting essentially at a 52-week low. it's been $8 forever. that's all you need to know. it's not about whether it hasn't been for many years. earning season starts on friday for me. it starts with jpmorgan and wells far go. one-third of all the mortgages out of wells fargo. mortgages should be down this quarter. i'm a little worried about this. this is very important. they could be down double digits

quarter over quarter. i think that will affect the stocks. that's what i care about. finally, let me show you what's going on tw the earnings. it's called gain the analyst. at the start of january, 3.6% increase in the s&p 500. they kept dropping it down. if this goes the way it historically goes, we're going to end up 4% to 5% earnings increase. it beats by 3% to 4% on the last number. today is the last number. i've been playing this for 13 years. 2015over all, carl, they're still expecting a 7% increase in earnings on the s&p 500. start of january it was 10%. they're taking it down. the markets are holding up pretty well overall. >> went through a similar exercise last year. let's get a check on energy and commodities as well. what a week they've had in the complex. sharon epperson is with us.

>> the traders below me all week long scratching their heads trying to figure out why gold is falling. we also have the north korea tension. so gold prices should be going up. now we're seeing the relief bounce. it has a lot to do with what was in the jobs report and what wasn't there. we're also looking at the fact that gold, silver, platinum, they're still at multimonth lows. a lot of traders pointing to the fact that we have seen big declines. metal and gold is another factor that contributes to the price. elsewhere we're looking at the crude market, which is really the biggest declineer and pretty much overall. we're seeing big losses there in the crude market. it's the lowest price we have

seen since august. what does this weak unemployment data mean for energy demand in the u.s. and for energy demand around the globe, too? we are looking at higher prices for u.s., and for diesel fuel. back to you. >> thank you very much. rick santelli is in chicago with reaction to the disappointing jobs report. >> we tried to cover it from top to bottom. it suspectisn't easy. actually, four parts are easy. i love our myth busters. financial myth busters. first one, sequestration. this is a political football. they're going to constantly use it, politicians, to try to continue bad medicine. what do you say about the impact on this jobs report and the economy thus far based on sequestration? >> so far on this jobs report, let's go with none. if you have to lay off people because of sequestration, there's a 30-day layoff period.

but in the march report there was no job loss because of sequestration. >> payroll tax hike. i personally think this is really odd. if you take away the contributions for benefits, yo u pay now or you pay later. you take that away. it really isn't a smart idea. your thoughts. did that contribute to this weak report? >> remember in february when wal-mart said the sales had fallen off and we explained it as being a logistical problem. 23,000 jobs were shed in the month of march. that's a huge number. if you don't make as much as you or i make, that hurts. you spend less money at the stores and they have less employees. >> january and february jobs reports were solid. many thought we could extrapolate that we return the corner with the jobs report in a big way. was that accurate assessment? >> this is the fourth year in a row we've seen this pattern.

now it's early because it's only march. january and february have been march. then you get into the summer and everything slides down. it looks like a problem of seasonality and too much hope in the economy. >> i was all alone for a long time about labor force participation rate. it in my opinion changed the dynamics of the election, maybe the outcome. it isn't a good thing. people are disappearing. okay. it isn't necessarily the easy excuse, politicians. why is it not demographics? >> that's what everybody wants you to believe, that people are retiring. 90 million people in the workforce. since the end of the recession, 14 million people have gone on disable. 5 million people have gone on food stamps. we created 4.5 million jobs. it's enjurjing people not to be in the workforce. the precipitation rate goes down. the unemployment rate falls

because of that. it's fallen four percentage points. that means all things being equal, the unemployment rate right now would be near 12%. >> jim, it's always a pleasure. >> thank you. >> thanks for being my guest. carl, back to you and have a great weekend. >> you too, rick. we'll see you soon. as we go to break, take a look at the markets. the dow is down 116. it's been tough sledding all week long as we got a jobs number that was the biggest mess in a couple of years. when we come back, this morning's markets aside, our next guest has ten reasons why he thinks the rally of 2013 is overbought. ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement.

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coming up next live from the new york stock exchange on halftime, judgment day for the rally. he called it dot come and housing bubbles, now robert shiler is making another big market call. japan is hedge fund's next battleground. how the big money is betting and whether you should follow the trade. we'll see you over in post nine in about 15 minutes or so. >> all right. we'll see you soon. stocks trying to come back from a deep sellhauf this morning. we have someone who says even with the drop today, market is overbought. too much exuberance. the volume. the 50-day moving average. insider selling. the defenses, of course, leading our way.

bulls investing cautiously. rising short position. historical trends. buying power being nearly maxed out and of course, an easy one to reck fiz, dow theorists have been silenced in recent weeks. david rosrosenberg joins from toronto. it's good to have you back, dave. welcome. >> thanks for inviting me. the. >> we have seen a lot of targets raised in recent weeks. are they being misled by this view that the economy is entering a new zone of increased possibility? >> i think it's called human nation. when i was a wall street economist, you superimpose the recent performance to the future. one of the things that really caught my eye was investor's intelligence sentiment showing 50% bulls. 20% bears. usually when you get to 30 percentage point bull/bear spread, that's the point for a

positive on the interim period. that's the one thing that caught my eye the most. >> what do you think about the volume at this point? >> the volume has been very tepid, which tells you about conviction levels among other institutional investors. usually what you want to see is the price action to the upside during a time when you see a lot of volume. they were into a really sustainable upward trend. and even the highs over the course of the past week, the volume was really lacking. that's usually a sign of validation. >> we've been talking about the general mills and pfizers leading us all yearlong. people are saying they're not overly exuberant. slow and steady wins the race.

>> these are areas of the market that we like. and people have been asking me what does the stock market see but they're looking at major averages. they're not looking beneath the veneer. so far you had a ripping market until the last couple of days and what led the markets to the highs, yeah, you're 100% right. it was not industrials or energy. it was a very interesting market that has been the defensives. it's been the areas of the stock market that trade like a bond that led the up side. and it is interesting. you have them in this order, health care, consumer staples. followed by utilities. they have good yields, stable businesses. but these are things that you want to own in the stock market. so, you know, look, within the stock market there's areas to like. and these are the areas that we've actually been putting our funds into.

>> interesting. >> historical trends. there's two things on this. there's the seasonality market that the sell in may has worked the last couple of years. there's also the notion that the length of the bull market, three and a half years you're getting in the long end of the toout neighborhood. are you a buyer of both of those notions? >> when you get down to averages you really mask the dispersion. there's no bull market. the just died of eald age. there's usually something that happens. we're talking about the market overbought and oversold. the reait will is that we just hit all time highs in the may jr. averages very recently and yet corporate earnings, s&p 500 operating earnings are down 2% year over year. so what that means, and it could come down to what the fed is doing from a liquidity perspective is the market has gone up to 15.5 times earnings. people will say, well, it's

lower than the averages. you can't really use the averages in this cycle. the reality is this, in the context of the recovery that we've been in for the last four years, when you have the trail l multiple, just like the 30 percentage point bull/bear spread, these are signs to take a deep breath and await for what will probably be a brief correction, but that will put money to work. this are sectors where evaluation has opened up. but the reality is that earnings are down. the market is at a high. time for a cause for pause, in my opinion. >> finally, david. and i'm sure you hear this all the time. if not equities, then what? our de facto response to all equity bears is, well, what? you have a better idea of what is working right now? >> again, talking with equity bears, i nevered a advocated 0

waiting. but it's also the sectors. if you were buying this year, if you were long technology as a group, you made no money. but these other parts of the stock market that trade like a bond, and look how bonds are trading positively, those are still parts of the stock narcotic that will behave very well in my opinion. now that volatility is back. now that we have a two-way traded market, which isn't by the way that unhealthy. now that we have correlations down, this is going to be breeding ground for hedge funds. i think that long-short strategies are going to do very well in this environment over the next few months. >> having you and bernstein on the same show today is like the old days. it's good to see you again. >> thanks a lot. a new report says apple is close to a deal with the music label. we'll get that story next. plus, did you nail the number? we do have a winner. and we'll bring the lucky person

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apple appears to be one step closer to a radio product. apple is close to a deal with warner music that would pave the way for a free musing streaming service on itunes. paul sloan joins us this morning from san francisco. it is a fantastic scoop. paul, good it have you back. >> thanks. good to be here. >> what do we think this will look like?

is it there own sort of spotify? >> no, it's not spotify because it's not on demand for it's more like pandora. it's internet radio. it would have an app. bear in mind apple keeps this stuff close to the vest even when they talk to the labels. they don't usually show demos. they don't have to do that. it would be baked into apple products and you could pick stations or artists much the way with pandora but be additional features, they're doing direct deals with the labels which pandora cannot to. you'd be able to rewind a song from what i know. >> it sounds like it would be a fast track to a purr has on itunes. is that fair to say? >> yes. a big problem with itunes is discovery. people go there to when they know what they want, but remember they had this failed product called ping a while back that was supposed to help, you know, be their social answer and help people find music and it didn't really work obviously. so if you have a radio and

playing something and just hear a song and there's a quick one-button way to just download or buy a song from itunes, that could really help and that's very appealing to the labels. >> yeah. your story seems to suggest apple might actually pay the labels less than they currently get from pandora. i'm wondering what's in it for them, why they would want to play. >> well, the way the terms are right now, it's all in flux and not final, could be very soon, they would pay a lower fixed rate. that means the amount they pay every time a song is streamed, it's a fraction of a penny but it would be less from what they get from pandora. there are other revenue streams which includes downloaded songs. if more people end up buyinging sos as they hear them, that's great for the labels because they get a bigger chunk from downloading songs and the artists. they get more from that than streaming songs. they promise to roll out a beefier ad business around the whole thing and they would get the labels are negotiating a revenue share with apple about

that. >> we're looking at a chart, paul, of apple versus pandora over the last year. i mean, they're almost diametrically opposed. apple is down a third. pandora is up a third. do you see this as a pandora killer? >> it can't be good for pandora. i don't, you know, i know you love me to prognosticate on what's a killer and what's not, but, you know, i mean, pandora is in a bind. the labels are not thrilled with pandora for a number of reasons. they get very little money from them. apple is still the dominant partner. you know, services like spotify is now the number two partner in terms of with apple. but if apple can pull off something like this, the labels are way behind it and pandora, they've got to be scared. >> paul, great scoop once again. thanks again. good to have you. paul sloan from cnet. >> thanks. when we come back, our nail the number winner. don't go away. [ female announcer ] what if the next big thing, isn't a thing at all?

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♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. visit a branch or call now for your personal retirement review. welcnew york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save

businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com it's that time again after sorting through hundreds of guesses on twitter we have a mail the number winner. michael rose of ft. lauderdale took a shot at the nonfarm payroll number. nailed it right on the head. 88,000. he joins us this morning on the cnbc newsline from ft. lauderdale. michael, good morning to you.

>> caller: good morning, guys, how are you this morning? >> you've been lowballing your guesses for a while. you thought this number was going to be even worse. how did you get to 88? >> caller: i thought the last couple numbers were way too rich. i included in there the payroll tax hike. i actually came up with a number about 68 and added 20 for the phantom 20,000 other people out there. so -- >> so you just added 50 to what you thought would be more like 38? you used to be a floor broker on the commodities exchange, you were a retail broker. you currently day trade mod commodi commodities. how to you think the rest of the year is going to shape up? >> caller: i think we're in a period of digestion. i think we need to look at the huge disconnect between the economy and the markets and kind of take it from there. i think at the moment there is this huge